1. University of Massachusetts - Dartmouth February 17, 2011 EFFORT REPORTING

2. Page 2 Objectives Definition Types Principles Regulations Risks.

3. Page 3 What is Effort? Proportion of time spent on professional activities (research, teaching, administration, and service) Expressed as a percentage of the total professional activity for which an individual is employed by the institution

4. Page 4 Key concept!!! Faculty effort not calculated on a 40-hour workweek

5. Page 5 Types of Effort Direct-charged effort Cost-shared effort Proposed effort Committed effort

6. Page 6 Direct-Charged vs. Cost-Shared Effort Direct-Charged Effort: charged directly to a Funding Agency through the payroll Cost-Shared Effort: expended towards a project, and the salary is not recovered from the project

7. Page 7 Proposed vs. Committed Effort Proposed effort: amount of effort (in %) that is proposed in any sponsored project application, regardless of whether salary support is requested. Committed effort: amount of effort (in %) promised by the institution in the proposal or the amended effort (in %) included in the award documentation.

8. Page 8 What is Effort Reporting? Method of documenting the proportion of time devoted to these professional activities as a percentage of total professional activity. Means that Federal agencies have to verify that salary dollars were charged properly, either direct-charged or cost-shared

9. Page 9 What kind of effort needs to be reported? All employees who have salary or wages charged or cost-shared to sponsored project All effort the University compensates the individual Sponsored Activities All effort expended on sponsored projects and cost shared Institutional Activities Department Administration Instruction and unsponsored scholarly activity Academic setting for faculty (Teaching, research, service, advising) Clinical activity

10. Page 10 Principles of Effort Reporting Based on actual university activities, but can be reasonably estimated “After the fact” Timing Percentages of total time (100%) regardless of number of hours. Includes all effort expended to meet commitments as a faculty member (hours will vary from person to person!)

11. Page 11 Faculty Effort Reporting Faculty instructional effort and research effort are often inseparable (“inextricably intermingled”) Faculty “research” effort often includes administrative (indirect) activities, e.g., proposal development 100% effort is confusing

12. Page 12 Why do we have to have effort reporting? It is a Federal requirement!! OMB A-21 OMB A-110 A-133 Audit Indirect Cost Proposal Verify that salaries paid were warranted and effort commitments were met Provides support for salary charged to grants and contracts Labor is the largest percentage of direct research costs on proposal budgets

13. Page 13 OMB Circular A-21 Section J10. Distribution of activity expended by employees, as a percentage Reasonably reflect and a reasonable estimate of the work performed by the employee during the period Suitable means of verification Confirmation of personnel costs charged to sponsored agreements Certification of all employee activities on an integrated basis (i.e., 100% effort)

14. Page 14 What’s at risk? Audit findings/cost disallowances High-Risk Organization designation Corrective Action Plan required Temporary withholding of payments or future awards

15. Page 15 Significant Risks of Non-Compliance Impact on the university: May owe direct cost refunds and payment of fines Affect future funding with sponsors Bad publicity Impact on the individual: Possible criminal and civil charges Payment of fines

16. Page 16 University Audit Settlements University of Minnesota: $32 M Northwestern University: $5.5M Thomas Jefferson University: $2.6M Beth Israel Deaconess Medical Center: $920K University of Chicago: $650K (PI paid $400K)

17. Page 17 National Science Foundation Funds ~$1.3 billion annually for compensation at universities * NSF Office of Inspector General (OIG) audited 30 Universities NSF OIG’s goals were to: Assess the adequacy of internal controls Determine if salaries and wages were allowable, allocable, and reasonable *June 2007 “Report on Research Compliance”

18. Page 18 Common Themes from NSF Audits Timeliness Education and training programs “Suitable means of verification” “Independent internal method for ensuring the system’s effectiveness” (A-21 requirement)

19. Page 19 Common Themes from NSF Audits (cont’d) Significant changes and updates to payroll distribution 5% Variance threshold Key personnel – required minimum effort and imputing cost sharing for the F&A proposal Voluntary commitments in proposals Summer effort and salary

20. Page 20 How can we Minimize Risk and Audit Findings? Revise policy-keep it simple!! Define “significant” change in effort Define roles & responsibilities Manage the high-risk areas Avoid explicit cost sharing commitments in proposals Training is needed for administrators and PIs Implement an Independent Internal Evaluation of Your Effort Reporting Process Instructions & information must be more readily accessible

21. Page 21 Thank you! Contact: Amy Gustavsson Manager-Reporting, Cost Analysis and Compliance Phone 617-496-4771 Email Amy_Gustavsson@harvard.edu